Tutorial 2

# Tutorial 2 - 07/08 Semester II THE UNIVERSITY OF HONG KONG...

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07/08 Semester II THE UNIVERSITY OF HONG KONG DEPARTMENT OF STATISTICS AND ACTUARIAL SCIENCE STAT1802 Financial Mathematics Tutorial 2 Feb. 01, 2008 1 Review 1. Annuity-immediate – payments of 1 are made at the end of each period for n periods. a n | i – The present value of an annuity-immediate with interest rate i . s n | i – The accumulated value at the end of the n th period of an annuity-immediate with interest rate i . 2. Annuity-due – payments of 1 are made at the beginning of each period for n periods. ¨ a n | i – The present value of an annuity-due with interest rate i . ¨ s n | i – The accumulated value at the end of the n th period of an annuity-due with interest rate i . 2 Exercise 1. A person at the age of 40 wishes to accumulate a fund for retirement by depositing an amount X at the end of each year into an account paying 4% interest. At age 65, the person will use the entire account balance to purchase a 15-year 5% annuity-immediate with annual

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## This note was uploaded on 04/17/2011 for the course STAT 1802 taught by Professor Dr.k.c.yuen during the Spring '08 term at HKU.

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Tutorial 2 - 07/08 Semester II THE UNIVERSITY OF HONG KONG...

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